Brookfield-based financial services technology provider Fiber Inc plans to acquire payment technology provider First Data Corporation (NYSE: FDC) in a $22 billion all-stock deal unveiled Wednesday.
The deal was approved by the boards of both companies and Fiber expects the acquisition to close in the first half of 2019, pending regulatory approval.
Fiber shareholders will receive nearly three of newly issued shares for each share they hold, or 57.5 percent of the combined company, while First Data shareholders will take the remaining 42.5 percent.
The implied First Data price from this deal is nearly $23 a share, or a 30 percent premium over Tuesday’s closing price.
First Data shares rose 18.0 percent to $21.19 in early trading, while Fiber shares saw an initial drop following its winning bid by over 5 percent to $71. The selloff shouldn’t surprise as investors take a wait and see approach on ultimsuccess, and and they often punish the acquirer initially.
First Data is a Georgia headquartered firm, which processes $2.4 trillion each year and 2500 transactions per second. It operates as a payment technology company that handles a wide range of services including credit card processing.
After an eight-year spell as a private company owned by multinational private equity firm KKR & Co, which back in 2014 managed to raise $3.5 billion in equity, First Data returned to Wall Street in the largest US IPO in 2015. In 2007, L.P. KKR & Co. acquired First Data for about $26 billion, in one of the largest leveraged buy-outs in the history. The deal kept First Data in the red for years.
Founded in 1984 and headquartered in Wisconsin, Fiber’s solutions are now used by more than 13,000 clients in over 80 countries worldwide. The company has also more than one-third of US financial institutions relying on its product suite for account processing solutions and expertise.